RSM Tenon Group Plc (TNO), the U.K.’s seventh-largest accounting and business advisory company, went into administration after takeover talks with Baker Tilly UK Holdings Ltd. fell apart and a key creditor said it wouldn’t relax lending terms.
Deloitte LLP was named administrator, and Baker Tilly agreed to buy the company’s trading units, which continue to operate normally, RSM Tenon said in a statement today. The sale is expected to be completed within two weeks, it said.
RSM Tenon, which had net borrowings of 80.4 million pounds ($125.2 million) at the end of last year, said the terms of the sale mean creditor Lloyds Banking Group Plc (LLOY) won’t recover its secured debt in full.
“This transaction allows for the ongoing success of RSM Tenon’s profitable trading businesses, free from the burden of the group’s historic debt obligations,” Baker Tilly, which provides accounting and business services, said in a separate statement.
Administrators were called in after Lloyds told RSM Tenon it wouldn’t waive the London-based company’s banking covenants if it breached the terms, RSM Tenon said.
Lloyds, the U.K’s largest mortgage lender, is providing financial backing for the acquisition of RSM Tenon’s trading units, London-based Baker Tilly said.
“We have supported the company for many months while it considered its options,” Lloyds said in a statement today.
RSM Tenon’s shares have been suspended from trading in London after falling 53 percent since July 25, when Baker Tilly said it was considering a bid for the company. RSM Tenon said Aug. 16 in an update on the takeover talks that minimal or no value would accrue to shareholders because of the firm’s debt.
Chief Executive Officer Andy Raynor and Chairman Bob Morton left in January 2012. The company reported the next month it reduced its 2010 pretax profit by 12.1 million pounds because of accounting errors.
RSM Tenon reported a net loss of 88.5 million pounds last year after the acquisition of competitor RSM Bentley Jennison Ltd. for 76.3 million pounds in December 2009 failed to prevent net income from declining for three straight years.
Matt Smith, Nick Edwards and Clare Boardman of Deloitte have been appointed as RSM Tenon’s joint administrators.
RSM Tenon employs about 2,300 staff in 35 offices. Baker Tilly has about 1,600 workers in 26 offices.
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